The present invention relates to auditing, and more specifically, to techniques for facilitating the auditing the financial records of a custodian of customer financial accounts.
The investment, banking, and insurance industries have custody of many kinds of securities, (shares, bonds, insurance products, etc.) and other assets such as real estate. Globally, there is estimated to be about $100 trillion under management by various investment businesses and individuals. Governments have established agencies for regulating the investment industry. For example, in the United States, the Securities Exchange Commission (SEC) is responsible to regulating this industry. Similarly, insurance companies, banks, Savings and Loans, and Credit Unions have federal and/or state regulations. These regulations often require regular audits of the books of the regulated financial businesses. Despite such regulations and audits, there is still a great deal of mismanagement, and outright fraud related to custody. The recent disclosure of an alleged $50 billion Ponzi scheme perpetrated by Bernie Madoff highlights the seriousness of the problem with fraud in which a custodian or fiduciary does not have the assets which it purports to hold for the accounts of customers.